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How to know if tax deductions from your salary is remitted to tax authority in Nigeria

Can you help me with this challenge I'm having at the office now? How do I know that my PAYE that is deducted from my salary every month is honestly and accurately remitted to the tax authorities since I don't have anything to show for it? I'm afraid I might not be able to present proof of remittance when the need arises.

My Response
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That's a good question and it truly calls for concern by anyone affected.

The issue is this, for any business entity, be it a Limited Liability Company or Sole Proprietorship that is engaged in any form of business activity in the State with any number of staff personnel in their employment, such should apply to REGISTER FOR PAYE and other taxes ...

(Sidenote: Though, the rule says 5 employees and above, but then it is advisable to register your members of staff for PAYE and start making remittances ASAP)

That's the first step in the equation ...

When the application is perfected, LIRS in return will reply the company in question under the signature of the Station Manager advising that the company is within jurisdiction and that moving forward all taxes and deductions that relate to PERSONAL INCOME TAX should wired through them.

The next thing is, a file will be opened for your company that will be resident at the LIRS office where your business is within jurisdiction. A PAYER ID will be generated specifically for your company alongside a few other revenue codes and will be ...

communicated to you.

It is on the strength of this PAYER ID and other revenue codes that PAYE deductions from salaries of members of staff are paid into any of the designated banks and a Revenue Receipt with the Lagos State logo on it will be printed and given to you as acknowledgment.

But before this payment can be initiated and paid, LIRS will need to calculate the exact amount (though, you should reconcile it with your own calculation) each member of staff will be expected to pay monthly via a staff salary schedule (On excel sheet) prepared showing the Tax Computation of every member of staff with the last name, first name, middle name, designation, allowances, gross income, consolidated reliefs, charge income, monthly tax payable signed and stamped by the officers responsible (Station Manager, Regional Coordinator and the officer dedicated to manage your company, more like an accounts officer in the bank) just so they are sure that the tax is accurately calculated.

The above is only a guide and a fore runner to the dynamics.

Now to answer your question.

On your payslip, you'll notice that a sum certain is deducted as PAYE and you are paid net salary after the deduction. There's a formula for arriving at that deduction (Will deal with that at a later date). Mind you, the fact that you have your payslip showing the deduction doesn't automatically translate to your taxes being remitted honestly and accordingly.

Your surefire PROOF to show that your PAYE tax which is deducted monthly is remitted accordingly is the LAGOS STATE REVENUE RECEIPT GENERATED BY THE BANK WITH YOUR COMPANY PAYER ID ON IT AND THE TAX COMPUTATION SCHEDULE SHOWING THE AMOUNT REMITTED.

The schedule will show a breakdown of all the members of staff whose salaries were deducted and the amount paid by them. Yours will definitely be there if you are a member of staff of that company ...

If you remain in the employment for 12 calendar months and your PAYE is remitted accordingly, then at the end of the 12th month, your tax consultant will initiate the processing of e-TCC cards for all members of staff with the LIRS Though it takes time for it to be ...

processed as it is outsourced to an outside company but yet, it will be done and delivered to you.

So, in the event you need to show evidence of remittance of PAYE whilst you await the e-TCC Card, you can make photocopies of the revenue receipts and salary schedule computation as it relates to you and present it. It is acceptable.